Am trying to understand how to use the CAT9532 IC so hope someone can help. Am i correct in thinking that you have to send 2 bits of data per i/o pin and can i send a big hex number to control all 16 i/o's in one transmission for example 0x55555555 (to turn all outputs on) or do you have to split it down to 4bytes?

can i send a big hex number to control all 16 i/o's in one transmission

No.

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do you have to split it down to 4bytes?

Yes, you have to send 4 bytes because you have to send everything split up into bytes over the I2C.

On page 11 of the datasheet you'll find an example of a complete command operation. The right column shows the data going over the I2C channel. Keep in mind that although the address data going over the I2C channel is 0xC0 (in the example), you have the specify the 7bit address (0x60) to the Wire library.